The federal government is studying ways to increase public spending, especially in the areas of infrastructure and regional development, to boost the country’s economy during and after the pandemic. As much as the topic is not favored by the top echelons of the Executive, there is pressure around Jair Bolsonaro for the Union to invest in works, mainly due to the potential to generate jobs, which, in parallel, could improve the political capital of the president and make him grow in popularity to get strong in the 2022 elections.
The main enthusiasts of this plan are ministers Tarcísio Freitas (Infrastructure), Rogério Marinho (Regional Development) and Luiz Eduardo Ramos (Government Secretariat). To this end, the three support a provisional change in the PEC of the ceiling on public spending, established four years ago and valid until 2036. The text limits the increase in federal disbursements to the previous year’s Budget adjusted for inflation measured by the National Price Index to Broad Consumer Price Index (IPCA).
The call for changes in the PEC gained momentum after the government gave up on recourse to extraordinary credits for investments in public works, a maneuver that would precisely circumvent the spending ceiling. Recently, the Chief Minister of the Civil House, Walter Braga Netto, was close to consulting the Federal Court of Accounts (TCU) on the possibility of using part of the War Budget, created to fund actions to combat covid- 19, in infrastructure projects.
The assessment is that only the current amount foreseen for the Infrastructure and Regional Development portfolios in the Budget – and neither the forecast for 2021 that has to be delivered by the Planalto Palace to the National Congress by the end of August – will not be enough to enable the conclusion of works and the opening of new investments. This has been defended by Bolsonaro since he traveled to Ceará, in June, to inaugurate one of the sections of the transposition work of the São Francisco River. From that moment on, the president began to hit the button that he does not want to leave any work stopped and promised to make trips around the country to deliver results every week.
Last week, during a virtual service order signing ceremony on highways in Maranhão, Tarcísio said that Congress needs to “face the issue of untying” the spending ceiling, otherwise “our space will be getting smaller and smaller”. “Now, unfortunately, we have a spending ceiling and we have mandatory expenses that grow, and a lot of related expenses. As we have the ceiling, if the health and education resources are growing, the infrastructure resource is decreasing ”, added the Minister of Infrastructure.
Bolsonaro’s economic team, on the other hand, does not welcome any kind of change in the PEC, especially the Minister of Economy, Paulo Guedes, and the Special Secretary of Finance of the Ministry of Economy, Waldery Rodrigues – who, in a public hearing in the Senate, last week, he treated the spending ceiling as the Union’s “fiscal super anchor”.
“We are always concerned with the issue of fiscal credibility, which is associated with the spending ceiling. We do not understand the need for revision. The ceiling requires even more focused zeal and attention, more intense from the federal government than we already had last year, and this will be done ”, he guaranteed.
Open negotiation in Congress
The disagreement over investment in works and the bursting of the spending ceiling did not prevent the government from talking to deputies and senators to find another way to increase spending on infrastructure. One way out may be the proposal made by deputy Mauro Benevides Filho (PDT-CE), which provides for the release of R $ 177.7 billion, retained in the Treasury in 29 sectorial funds, for actions to combat the pandemic and to contain the economic effects the health crisis.Minister Rogério Marinho (Regional Development) consulted the text’s rapporteur, Deputy Elmar Nascimento (DEM-BA), to suggest the allocation of at least R $ 23 billion for the portfolio. The amount would be used for sanitation projects and for the revitalization of the São Francisco River. The problem is that it is not clear in the proposal whether these resources should be used only in 2020 or if the application can happen in the following years as well.
Elmar meets today with the Mayor, Rodrigo Maia (DEM-RJ), and other leaders to present the government’s proposal. Maia is against it, as he understands that this money can only be used until the end of this year.